It is clear from the latest unemployment figures that the furlough scheme is working. With more than 5 million people on the government’s main wage subsidy, it has proved its worth yet again as a method of job protection, cushioning the blow from the pandemic as the UK entered a third lockdown.
Thousands of British companies have learned from the first two lockdowns. They have adapted to life online and kept goods and services moving, albeit mostly within the boundaries of the UK after the government left exporters to deal with the worst possible exit from the EU short of leaving without a deal.
Larger companies especially have looked ahead to a time when restrictions are lifted and opportunities for improved sales present themselves again.
But that is where the good news ends for the jobs market. If we look at the figures produced by the Office for National Statistics for the three months to the end of January, the fall in the unemployment rate to 5% from 5.1% is not so cheery.
The data shows that most of the ups and downs in the rate can be attributed to the short-term decisions of employers that operate in the worst affected industries.
Students who would normally have worked in the hospitality sector have not signed on as unemployed, they have disappeared from the employment register altogether. This has the effect, along with other young people who give up trying to find a job, of bringing down total participation rate to 79% in the three months to January, its lowest level since August 2019.
It shows, said Tony Wilson, the head of the Institute for Employment Studies, that new hiring by companies outside the very largest firms is continuing to fall back and all of the improvement is being driven by fewer people leaving work rather than more people getting new jobs.
“This is proving to be a disaster for young people, who now account for nearly two-thirds of the fall in employment and none of the recent growth,” he said.
Then there are the number of workers not being paid while their job is on hold, which has climbed from 200,000 to more than 300,000.
It is likely that the lower rate of redundancies in the three months to January of 11%, down from a peak of 14.2% in November, can be attributed to greater use of the furlough scheme.
It shows the lockdown and government support schemes mask a weakening labour market and when the furlough scheme ends in September, a spike in unemployment will follow.
There is a different way to deal with the situation. If the chancellor, Rishi Sunak, ditched his day-by-day approach to dealing with the pandemic and made a promise to maintain support for as long as it takes, employers could stop planning for cliff edges in subsidy schemes and plan for growth instead.